Capital Markets Day 2016

Transcription

1 Farnborough International Airshow Capital Markets Day 2016 AG

2 Agenda Part I Aviation 2016 Aircraft Raw Material Demand Global Supply Chain Aviation Industry China Part II voestalpine: A member of the club Special Steel Division Metal Forming Division Conclusion 2

3 Highlights and Insights Aviation

4 The global Aerospace market outlook Boeing current market outlook - Fleet in service evolution : Number of Aircrafts End of year Removed from service Source: Boeing Current Market Outlook 2015 removed build Total fleet Converted to freighter New deliveries 2015 to End of year 2034 The global aerospace market offers a steady growth within the next years. Boeing and Airbus comprise two-thirds of materials consumed for aerospace globally Pratt & Whitney 2% Embraer; 2% Rolls-Royce 3% CFM 3% CFM Intl 4% 2015 Aircraft material demand by OEM 707kt per year GE 5% other; 15% Airbus 30% Boeing 36% Source: ICF Analysis This duopoly strongly influences behavior of entire aerospace supply chain. 4

5 Aircraft Market Outlook 2034 asks for new aircrafts World Market Value: $b New deliveries: Airplanes Average airplane value: 150 ($M) Large wide-body Medium wide-body Small wide-body Single aisle Regional Jet Delivery units 13% 9% 1% 7% 70% Latin America 8% 60% of new aircrafts go into emerging markets. Middle East 8% North America 21% C.I.S. 3% Africa 3% Europe 19% Asia 38% 5 Source: Boeing Current Market Outlook 2015

6 Main Drivers of the Aviation Industry New Aircraft Delivery Demand Air travel demand Airlines ability to acquire new aircraft Economic Growth Oil Price vs. Air Fare Aircraft Retirements Airlines Finance Availability of aircraft financing Sources 6

7 Different forecasts, different approach Airline Monitor Top down approach from global passenger growth rate to world fleet. demand oriented 5.1% RPM 1 Average build rate in 2035 is 2,500 AC Major OEMs (Boeing and Airbus) Bottom up approach from backlog and projected orders to build rate. Supply oriented Airbus 4.6% RPM 1 Boeing 4.9% RPM 1 Average build rate in 2035 is 2,450 AC Airline Monitor Boeing CMO Revenue Passenger Miles Source: Airline Monitor 02/2016, Boeing Current Market Outlook 2015, Airbus Global Market Forecast /12/2016 CMD2016 Farnborough International Airshow

8 The average growth rate was increased to ~3.7% per year until 2035 Retired small regional jets will be replaced by larger single-aisle aircrafts Retirement age increases to years Number of Aircrafts Retired, scrapped, others Increase in fleet Average Growth rate : ~ 3.7% per year Source: Airline Monitor 06/2016

9 Aerospace a cyclical business with downturn approximately every 8-10 years Total delivered aircrafts total delivered aircrafts The 70 s recession -74% Energy price recession -42% Gulf war Tech bubble and 9/11-50% -35% Financial market meltdown 0 Year Source: Airline Monitor, Aircraft History, 02/2016, GE Aviation marketing analysis, Ascend 9

10 Market Trends Low oil price supports airline profitability A change in aftermarket due to a slight overshoot in aircrafts China economy development The need for a MoM Middle of the Market Aircraft is heavily discussed Some sign that a slow down maybe underway but no evidence so far Airbus and Boeing stay with their aggressive production plans 10

11 Aerospace: Further a growth market! Airline Monitor and major OEM forecast an average growth of ~3.7% per year from Airbus and Boeing have a backlog of >12,000 aircrafts representing 8-10 years of steady production. Highest load factor of aircrafts ~80% and parked fleets are years low. 11 Homato Source: Airbus, Boeing, Ascend, BCC analysis

12 Outlook 2020 Aircraft Raw Material Demand AG

13 2015 Aircraft Raw Material Demand The aggregated fly to buy ratio is ~ 6 composites other composites Titanium Aluminum Other Superalloys ~707 ktons Aluminum ~12bUSD Steel Titanium Steel Superalloys 13 Source: ICF International

14 2020 Aircraft Raw Material Demand The aggregated fly to buy ratio is ~ 6 composites other +5.8% composites Aluminum Titanium Superalloys +4% ~740 ktons Aluminum +1.9% -0.7% (CAGR p. year) +0.7% Other Titanium ~12,5bUSD Steel Steel Superalloys 14 07/12/2016 CMD2016 Farnborough International Airshow Source: ICF International; calculation with same commodity prices

15 Majority of the aerospace material demand for value added is US based, followed by Europe Aerospace raw material demand ~707ktons other Military Asia Heli Europe by Region* North America BGA** by Market Air Transport 15 *) Region where most value-added work is performed **) Business and General Aviation Source: Aerolytics, 12/2015 Sheet and Plate Study

16 Aviation Industry Global Supply chain AG

17 Business Characteristics Aircraft Limited players Zero defect approach Trust (track record, safety), relationship and market power are key decision criteria Highly conservative business behavior (to become member of the club ) Price pressure Serial business (small scale) Defined products through very tight specifications Frozen technologies Strict management of failures Low level of differentiation through the product/service portfolio The business with the highest entry barrier for mission critical parts/materials Product characteristics typical for Operational Excellence 17

18 A challenge to the supply chain! OEMs monitor their supply chain with frequent capacity audits and ramp-up control The supply chain is ready for the next growth peak, OEM requested supplier to make investment Possible over-capacity will have to be managed solely by supplier Supplier s constantly high performance over the next 3-4 years will guarantee them pole position in the following multi-year-bids Homato 18

19 The global Aerospace Value chain is worth ~600bUSD and employs more than 2.3 Million people*) 54% North America ~1,100,000 people ~310bUSD UK 4.5% France 8% 200,000 Europe: ~ people ~175bUSD Germany 4% 110,000 30% 14% *) without Russia Asia*) ~600,000 people ~ 88bUSD Brazil ~20,000 people ~6bUSD 19 Source: TKA 2014, BPac, Market reports Mexico, Morocco, Brazil

20 Different value chains Different decision criteria Sales Production Development Delivery Service Marketing and Sales Research and Development Parts Manufacturing Subsystem Assembly System Assembly Final Integration Delivery and Acceptance After Market Service OEM mainly Boeing and Airbus Region North America, Europe, Asia Material Aluminum, Steel, Titanium, Superalloys Modules aero structure, aero engine, components & systems Safety level rotating & non-rotating parts, critical and non-critical parts 20 voestalpine special steel division OEM integration Graph: Harvard Business School, Aerospace Cluster in the Toulouse Region, 2013

21 Aerospace competitive landscape Steel, Nickel based, Titanium and Aluminum alloys m USA Europa Asien 21

22 Supply Chain e.g. metal components Melting needs to start in average 2 years before final aircraft assembly Forging follows ~ a year later Flexibility thus, is hard to serve but a basic requirement Source: SMR

23 Key Message OEM: We need to deliver what we have sold! OEM challenge: to secure a smoothly running supply chain! OEM expectation Supply chain action Ramp-Up in a global environments Ensure sufficient capacity (incl. protecting customer s needs with double sourcing in Low Cost Countries) On-time delivery Quality Anticipate and communicate Continuous improvements Commercial added value Reach and sustain excellent performance Make it right the first time, zero defect approach Manage the risk. Ensure timely communication with the customer Reduce waste (recycle, close to net-shape), flow optimization by local-for-local sourcing And for sure Pressure on costs! Be creative and propose solutions for optimization Source: Airbus, Boeing 23

24 Directed buy business model e.g. forged parts 24 OEM assembly and planning OEM Subassembly b c a OEM Billets e.g. Titanium UKAD TIMET VSMPO ATI BIG OEM negotiating supply conditions with/for all business partners Special Process local 13 local 11 local 12 local 14 local 10 OEM local 8 local 9 local 7 local 6 local 5 local 4 local 3 andere Böhler local 2 Forge ATI Machining d y z c b a Wyman Gordon A&D Inhouse Wyman Gordon Transaction Scrap Processor z u y x

25 Raw material Different ways into the market Structure Hot former Mill Direct Billet, Ingot, Profile Roller Ring Roller Closed Die Forgers Open Die Forgers Part made to a drawing Machine Shop1 Machined Part Tier 1 Assembly OEM Melter 1 e.g. Böhler Bar Melter 1 Melter 1 Melter 2 Global Service Provider Distributor 1 Distributor n Machine Shop1 Machined Part Tier 1 Distribution Assembly OEM 25 Source: value case Böhler Aerospace, 2014

26 Aviation Industry China AG

27 12% of aerospace material ready for processing is needed in Asia, but only 1% demand is for Asian OEMs 2015 Aerospace raw material demand ~707ktons other Asia RoW Asia by Region* North America Europe by OEM Region North America Europe *) Estimate where most value-added works is performed 27 Source: Aerolytics, 12/2015 Sheet and Plate Study, ICF International 05/2016

28 Comac C919 will gain a market share of 4% on the single aisle market from 2035 on Single Aisle Delivery Forecast per year C family A320family *) Total world fleet minus retirements World Fleet* Source: Airline Monitor, 02/ /12/2016 CMD2016 Farnborough International Airshow

29 How Chinese is China s new passenger jet? Some major systems or other critical parts are produced abroad or by foreign OEM s in China. Aircraft structure made in China Airframe, Wing, etc. Systems made for China Aero Engine, Thrust Reverser Landing Gears Auxiliary Power Units (APU) Fuel System 29

30 Though domestic aircraft and parts manufacturers scattered throughout China, the sector is still underdeveloped and creating a strong demand for reliable imported products and technologies to ensure quality standards Major opportunities were found in: Aero engine components and technologies and other systems Small niche parts manufacturer & materials Final assembly and Tier1 supplier Services such as design & engineering, precision machining and training Airport design and construction companies and ground service General aviation 30 Source: Aerospace / Aviation Industry Opportunities in Japan & China, 06/2015

31 The Chinese Aerospace Industry will only grow disproportionally with their demand of new aircrafts Comac s market share is estimated 4% on single aisle in 2035 China s success in Aviation Industry strongly depends on Western Aviation Safety Agencies Approvals (FAA and EASA) Lack of talents and technologies urgently require foreign support The easy to make parts will be made in China no chance to cope with their price structures The hard to make parts will open a certain window of opportunity for foreign supplier Key: How much of foreign OEM s sourcing strategy will be China? 31

32 Farnborough International Airshow Capital Markets Day 2016 Part II AG

33 A member of the club: voestalpine AG

34 Key figures for 2015/16 Employees 48,367 Revenue EBITDA EBIT EUR 11,068.7 million EUR 1,583.4 million EUR million EBIT margin 8.0% 35

35 Metal Forming Revenue (Mio. EUR) 2,224.9 EBIT (Mio. EUR) EBIT-Margin 8.7% Employees (fulltime equivalent) 10,470 19% 33% Steel Revenue (Mio. EUR) 3,753.7 EBIT (Mio. EUR) EBIT-;argin 5.9% Employees (fulltime equivalent) Metal Engineering Revenue (Mio. EUR) 2,850.4 EBIT (Mio. EUR) EBIT-Margin 11.0% Employees (fulltime equivalent) 12,675 25% 23% Special Steel Revenue (Mio. EUR) 2,650.9 EBIT (Mio. EUR) EBIT-Margin 8.6% Employees (fulltime equivalent) 13,470 36

36 Anyone who wants to change the world can depend on us We re the partner of choice worldwide for demanding product solutions involving steel and that allow our customers to stay that decisive step ahead We are the world s market leader or hold leading positions with all of our four divisions Steel Metal Engineering Special Steel Metal Forming 37

37 voestalpine Group Aerospace companies 92% 8% 38 Steel Division Special Steel Division Böhler Bleche Böhler Edelstahl Böhler Profil Böhler Schmiedetechnik Böhler Schmiedetechnik Villares Metals Eifeler Group Edro Engineering Distribution & Service Network (NA, EU, Asia) Metal Engineering Division Metal Forming Division Roll Forming Corporation

38 Special Steel Division in key figures Sales by region Sales by customer industry Rest of world 8% South America 8% Asia 17% North America 15% European Union 53% (of which Austria 4%) Construction 4% Aviation industry 12% White Goods/ Consumer goods 12% Other 14% Energy industry 12% Automotive 27% Civil & mechanical engineering 19% 07/12/ CMD2016 Farnborough International Airshow

39 Austrian Steel Manufacturing Tradition meets Aerospace

40 Global Aerospace Value Chain processes products manufactured by voestalpine Melting Casting Forging, Rolling Heat Treatment Pre- Machining / Jet Cutting Testing Target / Final Machining Special Process (Semi-) Assembly OEM Bohler Edelstahl Villares Metals Bohler Bleche Bohler Edelstahl Bohler Profil Bohler Schmiedetechnik Bohler Edelstahl Bohler Schmiedetechnik Edro Bohler Bleche Bohler Edelstahl Bohler Profil Bohler Schmiede -technik Edro Eifeler Group Roll Forming Corporation 41 Roll Forming Corporation Bohler Schmiedetechnik Voestalpine special steel division OEM

41 voestalpine products in the Aerospace industry Special Steel Division Roller Track / Wing Bar product Engine disc Side load fitting Engine Disc Sheet and plate Wire Landing Gear Component Engine Mount Fastener Rail Böhler, trusted for advanced metal solutions, global availability and local services for aerospace! 42 Landing gear components Guide vane / Engine Turbine ring

42 Aerospace Material Distribution by voestalpine special steel division value added services North America: Böhler Uddeholm Corporation (USA) Walnut CA Kent WA Dallas TX Böhler Uddeholm Ltd. (CAN) Rexdale Europe: Böhler Uddeholm Germany Böhler Uddeholm France Böhler Uddeholm UK Eifeler Group Asia-Pacific: Böhler Pacific (SGP) 43

43 Bars Billets Forgings (open & close) Sheets & Plates Profiles (hot rolled) Wire, Profiled Wire PVD Coatings Pre-Machining Aerospace Product Portfolio voestalpine Special Steel Division Product Segments Structures x x x x x x Airframe Fuselage x x x x Door surroundings x x x x x Pylon / Engine Mounts x x x x x Bearings x x x Fasteners x x x Disks / Blisks x x Engine Shafts x x x Bearing x x Casings x x x x Blades / Vanes x x Landing Gear 44 Structures x x x x x Brakes x x x Hydraulic x x Bolts x

44 Our customers are key to our success! AS/EN9100 and 9120 Nadcap approvals: Heat treatment PVD coating Testing Several customer approvals 45

45 voestalpine will double it s Aerospace revenue until FY 2020/21 Special Steel Division: Growth in closed die forgings, bar and plate Elimination of growth inhibitors (capacities, approvals, market access to OEMs, etc.) Investment in 2 new VAR furnaces Major new customer approvals Growth project Value Added Services with aerospace hubs in Germany, USA and Asia Extension of value chain: finished machined forged aircraft parts 46

46 voestalpine Special Steel Division Companies, capabilities and competitive edge AG

47 BÖHLER BLECHE GMBH & CO KG 48

48 State-of-the-art in production Böhler Bleche is specialized in the production of cross-rolled sheets and plates. 3-High Mill 2-High Mill Cold rolling mill Heat Treatment, Cutting, Finishing 49

49 Faster, Further, Safer Böhler Bleche currently holds 17 quality system and product approvals Laboratories and NDT approvals as well as Nadcap and AS9100. Such as Airbus, Boeing, Gulfstream, BAE System, Group Safran, Spirit Aerosystems, Bombardier etc. Wing flap Engine Casing 750 tons 15-5PH Heat treatable steel Creep resisting materials 17-4PH others Parts of breaking systems 50

50 BÖHLER EDELSTAHL GMBH & CO KG 51

51 State-of-the-art in production 50t EAF, 15t IF, AOD, LF, VOD VIM, VAR, ESR RF100 rotary forging machine 5.200t forging press Cogging mill Multi-line bar mill Heat treatment Bar steel surface finishing Testing 52

52 Production Route 53

53 Faster, Further, Safer Böhler Edelstahl holds the major jet engine and airframe manufacturer quality system approvals Laboratories and NDT approvals as well as Nadcap and AS9100. Such as Airbus, Boeing, GE, Pratt & Whitney, Rolls-Royce, etc. 54

54 Aerospace Alloys Major Steel Grades Nickel Grades 55

55 Aerospace Alloys Major Steel Grades 56

56 BÖHLER PROFIL GMBH & CO KG 57

57 State-of-the-art in production Open rolling mill Computer controlled continuous rolling mill Drawing bench Heat treatment Testing High flexibility 58

58 Faster, Further, Safer We roll near net shaped profiles and bars to tailor made solutions For flash butt welded rings and guide vanes for aero engines AS9100 Approvals from Leistritz, Defontaine and PAG Turbine Ring Engine Casing Turbine Ring Exhaust Engine Static Vane 59

59 BÖHLER SCHMIEDETECHNIK GMBH & CO KG 60

60 State-of-the-art in production 355MN and 315MN mechanical screw press Several hydraulic and mechanical hammers (35mt counter blow hammer) Heat treatment Machining, water jet cutting Ultra-sonic immersion testing and other NDT 61

61 62

62 Faster, Further, Safer Our core competence is the near net forging of high-alloy steels, nickel-base alloys and titanium alloys Heat treating and non-destructive testing approved by NADCAP All major OEM and customer approvals Ni-Basis Stahl Titan Aerospace Structures Discs Blades Special Forgings 63

63 Value added services Böhler, trusted for advanced metal solutions, global availability and local services for aerospace. Worldwide sales and service network with 150 warehouse and service sites in 45 countries Global #1 in service centers for tool making 64

64 State-of-the-art in aerospace distribution Aerospace hub in Germany Düsseldorf AS9120 approval for 8 locations is 6 countries 3 in North America Canada France Germany United Kingdom Singapore Böhler premium grade Stainless steel and Superalloys 65

65 Aerospace Services and Processing Eifeler Group Physical Vapor Deposition PVD Coating Engine bearing rings All major engine OEM approvals Nadcap Edro Engineering AS9100 approved machine shop In Walnut California 66

66 voestalpine Metal Forming Division Companies, capabilities and competitive edge AG

67 Metal Forming Division Forming superior solutions Tubes & Sections Automotive Body Parts Precision Strip Warehouse & Rack Solutions Division 2,224 billion in revenue 10,470 employees Customized special tubes and sections with a global presence Innovative automotive body parts for lightweight solutions Leading competence in precision strip steel for demanding applications Intelligent rack system solutions for complex logistical tasks Center of competence for highly refined sections, tubes, and precision strip steel products as well as ready-to-install system components made of pressed, stamped and rollformed parts. 68

68 Metal Forming Division in Aerospace 1967 Salt bath solution heat treat process developed W condition forming 1979 AM355 profiles developed for leading edge application 1997 Dedicated Aerospace Facility Constructed 1999 Titanium roll forming testing 2006 Inspection fixturing patented 5 Axis Contour process Extrusion Processing 2010 Ti 6-4 Laser welded assembly in production patented 2015 Ti roll forming sections 1949 First profiles supplied to aerospace industry 1969 Initial Boeing long term contract 1980 First profiles delivered to Gulfstream 2000 Roll Forming Corporation Purchased by 2007 Titanium welding development - initial connect technology testing 2011 Inconel roll forming 69

69 Global Aerospace Value Chain: Metal Forming Division profiles manufactured by voestalpine Raw Material Procurement Raw Material Processing Roll Forming Heat Treating Value Add Operations Quality Inspections Sub Assembly OEM 70 voestalpine RFC Aerospace Tier 1 Supplier OEM

70 Aerospace Strong capabilities in leading metal forming processes Metal forming processes Lightweight material Roll forming Extrusions Press forming Laser welding Operations in-line Stamping, Bending, Inserts Aluminum Titanium Tailored blanks Hybrid solutions Operations off-line 71 Riveting, Joggling, Contouring, Stretch-bending

71 voestalpine RFC Aerospace specialized in metal processing Roll forming Variable gauge thickness for reduced buy to fly ratios Extrusion Processing Contouring, machining, and end configuration Thermal Processing Solution heat treating and artificial aging Connect Technology Multi-axis laser and plasma arc welding Material grades: Al-alloys (2014, 2024, 6061, 7055, 7075) Al-Li-alloys (2090) Ti-alloys (Ti , Ti 6-4) Inconel Stainless 72

72 Slitting and Roll Reduction Processing Capabilities Raw material purchased in master coils, slit to width and roll reduced 73

73 Aerospace Know how synergies Example fuselage cross section 74 1 seat rail 2 cabin cross beam 3 cargo floor cross beam 4 cargo lining structure 5 belly sub-structure 6 lateral frame 7 crown frame 8 bottom ring 9 modular overhead rack 10 stringer 11 belly faring see case study

74 Roll Forming Custom shapes or build to print 75

75 Aerospace Know how synergies Case study: 2nd concept : Flexible roll-forming decreases buy-to-fly ratio and process time significantly 76

76 Processing Capabilities Joggling Close tolerance joggle positions decrease barrel section assembly time 77

77 Contouring 5-Axis Contouring Process Hats, channels, extrusions Long and complex contour 78

78 Connect Technology Processing Capabilities Laser welded Titanium seat tracks undergo numerous process steps and quality inspections prior to assembly on the floor grid 79

79 voestalpine products in the Aerospace industry Metal Forming Division stringers seat-tracks floor panel supports crown frames engine rings leading edges for helicopter blades 80

80 Metal Forming Division Aerospace Quality Certifications ISO 9001:2000 AS 9100 Rev C NADCAP Heat Treating NADCAP Non-Destructive Testing NADCAP - Welding BAC 5423 Dye Penetrant Inspection BAC 5439 Ultrasonic Inspection BAC 5602 Heat Treat BAC 5686 Laser Beam Welding of Titanium for Structural Applications BAC 5946 Inspection of Alloys BAC 5962 Qualification / Certification of Weld operators BAC 5975 Fusion Welding of Metals BSS 7039 Penetrant Inspection BSS Digital Radioscopic Radiologic Inspection BSS 7075 Qualification of Non-Film Radiographic Systems for Weld Inspection Boeing and Spirit Delegated Source Inspection ROHS and WEEE Environmental Compliance ISO 14001:

81 voestalpine Aerospace Emerging Technologies AG

82 Emerging Technologies are on our Agenda Light weight and high temperature resistance are key. Material trends: Aircraft structure: Titanium substitutes Aluminum. Aero engine: Powder alloys, Nickel-based alloys, Titanium Aluminides and ceramic matrix composites. Coatings: Applied coatings protect components against wear, corrosion and increasing process temperatures. Additive manufacturing Be the Solution provider (one stop shop) within Additive Manufacturing Technologies Source: Airbus, EADS, GKN, General Electric (GE), GE Avio Aero, MTU Aero Engines, Winbro Group 83

83 voestalpine Special Steel Vision for Additive Manufacturing Be the Solution provider (one stop shop) within Additive Manufacturing Technologies Powder development Powder production Design 3D-Partsmanufact. Heat Treatment & post processing Customer consulting & 84

84 Conclusion Aerospace a growth market AG

85 Aerospace is a growth market and we are committed to it. Operational excellence, trust & reliability are key success factors The business with the highest entry barrier for mission critical parts/materials Market consolidation goes on OEM s interest in having independent supplier will grow. Price pressure will increase Homato Homato 86

86 Farnborough International Airshow Capital Markets Day 2016 AG